﻿﻿ A healthy labor market is a means through which workers earn enough to afford such basic necessities as food and housing and to thrive over time. Judged against that standard, North Carolina’s comeback is far short of the mark.

By various measures, North Carolina’s labor market has yet to recover fully from the “Great Recession.” Job growth has failed to keep pace with population growth, and a smaller share of state residents is in the labor force than at any time since the 1970s.[1] North Carolina ended 2014 with barely 1 percent more payroll jobs than it had 7 years earlier, despite having 11.3 percent more working-age residents. And in December 2014, North Carolina had 9.4 percent more unemployed residents than it did 7 years prior.

Labor market conditions have improved since the worst part of the recession. Notably, the statewide unemployment has fallen from a cyclical high of 11.3 percent in early 2010 to 5.4 percent in late 2014.[2] The drop in that important but limited indicator has led many civic leaders to celebrate a “Carolina Comeback.” This simplistic view of the economy misses the fact that, for most working Tar Heels, a low unemployment rate is not an end in itself. A healthy labor market is a means through which workers earn enough to afford such basic necessities as food and housing and to thrive over time. Judged against that standard, North Carolina’s comeback is far short of the mark.

Income trends in North Carolina are running in reverse. Unless the discussion of the labor market recovery is connected to the larger matters of income and living standards, it tells an incomplete story.

A robust labor market matters because North Carolinians earn almost all of their household incomes through it: in 2013, the state’s households derived almost $80 of every $100 in income from wages, salaries, and self-employment payments.[3] Lost in recent policy discussions is the fact that inflation-adjusted hourly wages in the state have fallen since 2007 for all but the top 10 percent of workers.[4] The recessionary spike in unemployment and the slow recovery have reduced the earnings of jobless persons, but weak conditions have affected the earnings of employed persons, too. After all, when unemployment is high, firms freeze wages or effectively reduce the wages of employees who then struggle to find better jobs due to weak demand.

The decline in labor earnings has pushed down household incomes across the state. From 2007 to 2013, the inflation-adjusted (real) income of the median North Carolina household fell significantly, dropping to $45,906 from $50,186.[5] By a different measure, real median household income in North Carolina was statistically no different in 2013 than in 1984, and the gap between the statewide and national levels was wider than at any time since that year.[6]

Income trends in North Carolina are running in reverse. Unless the discussion of the labor market recovery is connected to the larger matters of income and living standards, it tells an incomplete story. To call attention to the trends that have unfolded since 2007, Think North Carolina First recently asked South by North Strategies, Ltd. to analyze state-level income data.

The inflation-adjusted income of the typical (median) North Carolina household fell to $45,906 from $50,186 between 2007 and 2013; that is a decline of 8.5 percent, or $4,280.

The recovery that began in 2009 has not raised the real income level of the median North Carolina household; in fact, that income level fell by 3.2 percent between 2009 and 2013.

Between 2009 and 2013, real average household income fell or remained unchanged for every income group in North Carolina except for the top 5 percent of households.

The distribution of household income in North Carolina has grown more unequal since 2007, with the distribution being more unequal than that of the overall United States.

The decline in income is intertwined with a drop in labor earnings; since 2007, the real earnings of the median worker (age 16+) have fallen by 7.4 percent, or $2,177.

When placed in historical context, several other concerning income developments emerged:[8]

Real median household income in North Carolina was effectively no different in 2013 than in 1984.

The gap between North Carolina’s median household income and the national figure was wider in 2013 than in any year since 1984.

Recent income losses have helped to erase all of the progress North Carolina made during the 1980s and 1990s in raising real median household income to the national level.

The poor labor market conditions of recent years have exerted downward pressure on wages and incomes across North Carolina, but public policy choices have exacerbated the forces. Allowing inflation to erode the value of the minimum wage, refusing to enforce and to modernize labor laws, undercutting the effectiveness of the unemployment insurance system, making work more costly by repealing the state earned income tax credit, and enacting tax policies that fail to boost growth yet drain needed public revenues—these choices have tamped down wages and incomes. It is unsurprising, then, that income inequality has risen significantly since 2007, with the state’s distribution of income being more unequal than the national one.[9]

This report traces state-level income trends since 2007, views the trends historically, documents a shifting income distribution, and considers the tie between earnings and incomes.[10]

2. Understanding Income Trends

This study uses publicly available data from the U.S. Census Bureau to analyze income trends in North Carolina, paying special attention to developments that have occurred since 2007. The following sections sketch the key concepts and data sources featured in this report.

“A flow of economic or financial resources received by an individual or household within a particular span of time,” income enables a household to consume various goods and services, either immediately, or at a later date.[11] Because income shapes a household’s consumption and savings possibilities, it is perhaps the best gauge of how a household is faring economically.

The main income concept used by the U.S. Census Bureau and in this report is money income, or the “income received (exclusive of certain money receipts such as capital gains) before payments for personal income taxes, social security, union dues, Medicare deductions, etc.”[12] This concept has four limitations. First, it tracks only certain forms of income, and by excluding certain forms received predominately by affluent households, such as capital gains, and certain forms received predominately by low-income households, such as tax credits, money income understates the incomes of the richest and poorest households. Second, as a pretax measure, money income overstates the resources available to spend. Third, survey respondents tend to underreport their incomes.[13] Lastly, the Census Bureau “top-codes” data for the richest households, but that choice limits the data’s usefulness in studying income inequality.[14]

Household income is the sum of money income received by all the people in a household, which comprises all of the persons who share a unit of housing.[15] A household is not the same as a family. A person living alone, a married couple with children, a single parent with children, and an unmarried cohabitating couple—each of these is a household.

Households derive their income from three main sources. The largest source is labor income, which consists of wages, salaries, and self-employment earnings. Investment income is another source, but, as noted, money income excludes many forms of investment income. Lastly, households receive transfer income (e.g., Social Security) from public and private sources. In 2013, households in North Carolina collectively received $240.9 billion in money income. Labor income accounted for 78.1 percent of the total, followed by transfer income (15.2 percent), investment income (4.7 percent), and other income (2.1 percent).[16]

Income is highly sensitive to changes in the business cycle. In a market economy, economic activity generally fluctuates, gradually growing to a peak, after which it declines until reaching a trough, before growing again toward another peak.[17] Nationally, the period dubbed the “Great Recession” stretches from 2007 to the present and has a contraction phase that ran from December 2007 to June 2009, and an ongoing expansion phase that began in June 2009.[18]

This report analyzes money income as measured in two surveys fielded by the U.S. Census Bureau: the American Community Survey and the Annual Social and Economic Supplement to the Current Population Survey.

Conducted annually since 2005, the American Community Survey (ACS) is a detailed survey of households that inquires about, among other things, money income received in the last 12 months. Three aspects of the ACS are noteworthy. First, the ACS is subject to non-measurement and measurement errors, and the estimates are bounded by a margin of error at a level of confidence (90 percent). Second, the ACS is a continuous survey that collects data monthly, so a household surveyed in January will have a reference period different from that of a household surveyed in December. Finally, the ACS generates period estimates, which resemble an average value over a span of time rather than a count on a specific date or a cumulative total.

The ACS is the Census Bureau’s preferred source of state income data, but it is not suited for long-term analysis. In contrast, the Current Population Survey’s Annual Social and Economic Supplement (ASEC) offers historical estimates of money income, but technical differences yield values different from the ACS.[19] The ASEC also is prone to assorted errors.

This report uses ACS data to analyze developments that have occurred since 2007 and ASEC data to trace historical trends. When a difference in two estimates is called “significant,” it means that the values have been tested statistically and found to be significant at a 90 percent level of confidence. In short, there is a 90 percent chance that the difference is not random. [20]

To account for changes in the price level, the study converts all dollar figures to their 2013 values with the Consumer Price Index Research Series Using Current Methods.[21] Additionally, the study focuses primarily on median income, or the income of the household in the middle of the income distribution. The median is a better gauge of the “typical” income than the average value since it is not distorted by the presence of households with extreme incomes.

Since 2007, the typical household in North Carolina has experienced a sharp, steady, significant decline in income and, by extension, living standards. Unsurprisingly, median household income fell during the contraction that occurred from 2007 to 2009. Alarmingly, the recovery that began in 2009 has yielded few improvements in median household income; instead, the value has fallen significantly. In 2013, the last year with ACS estimates, the state’s median household had a real income of $45,906, which was 8.5 percent, or $4,280, lower than was the case in 2007.[22]

When recent income trends in North Carolina are placed in historical context, several alarming patterns emerge. First, the median North Carolina household in 2013 had (based on ASEC data) an inflation-adjusted income that was statistically no different than the value logged in 1984. Second, the gap between the income received by the median Tar Heel and the median American household was wider in 2013 than at any point since 1984. Almost 30 years ago, the median North Carolina household received $92 in income for every $100 received by the median American household. But by 2013, the median North Carolina household’s income fell to $79 for every $100 received by the median American household. Finally, the developments of recent years have erased the progress North Carolina had made in closing the income gap separating it from the nation. That gap narrowed during the 1980s and 1990s, reached parity in 1996, fluctuated for several years, and has widened since 2001.[23]

The typical North Carolina household lost $4,280 between 2007 and 2013, an amount equal to almost 75 percent of what a middle-income household spent on food in 2013.

Additionally, the recovery has failed to produce significant income gains for a broad swath of households in North Carolina. Family households and households headed by non-Hispanic White, African-American, Hispanic, and Native American persons all have experienced significant declines in median household income since 2007. It is unsurprising, then, that the overall distribution of household income in North Carolina has become significantly more unequal, with the state’s 2013 distribution of income being more unequal than the national one.[24]

A key reason why the recovery has not boosted median household income is because labor earnings have fallen significantly. ACS data show that the inflation-adjusted earnings of the median worker (age 16+) in North Carolina fell by 3.3 percent, or $939, from 2009 to 2013. When broken out by educational attainment, real median earnings have fallen significantly since 2009 for every group of workers (ages 25+) except for those persons who lack a high school diploma and those with a bachelor’s degree, both of which experienced no changes.[25]

The following sections provide additional information about the findings just mentioned. The discussion begins by using ACS estimates to create a snapshot of the income distribution in North Carolina in 2013, before shifting to an analysis of the trends in median household income that have unfolded since 2007. Next, the report widens its focus to include ASEC data to consider historical income patterns since 1984. Attention then shifts to the recent past to assess changes in income inequality, while the final section considers changes in labor earnings.

3.1 A Snapshot of Household Income: North Carolina in 2013 [back to top]

According to the ACS, median household income in 2013 in North Carolina equaled $45,906. That means that half of all households had annual incomes above that amount and half had less. North Carolina’s median household income of $45,906 was significantly lower than the national figure of $52,250. The difference was not anomalous as median household income in North Carolina has been significantly lower than the national level every year since 2005, which is the first year with complete ACS data.[26]

Table 3.1 divides the state’s approximately 3.8 million households into 5 equally-sized groups (quintiles) of 751,496 households each. In 2013, one-fifth of North Carolina households had less than $19,469 in income with the average income in this quintile equaling $10,544. At the other end of the spectrum, one-fifth of households had more than $91,701 in annual income with the average income in this quintile equaling $164,092.

To provide added detail, Table 3.1 breaks the top income quintile into two smaller groups: the next 15 percent of households and the top 5 percent of households. In 2013, an income in excess of $171,854 placed a household in the top 5 percent of the income distribution. (Recall that the money income concept tends to understate the incomes of the households with the highest and lowest incomes.) Households in the middle three quintiles—a broad definition of middle-income households—had between $19,469 and $91,701 in income.

When compared to the nation, the average income of every quintile in North Carolina was significantly lower than the corresponding national one. For example, the average income of the middle fifth of North Carolina households was $45,940, an amount 12.9 percent below the national figure. Similarly, the average income of the bottom fifth of Tar Heel households was 8.7 percent less than that of the bottom fifth of all American households, while the top 5 percent of households had an average income that was 13.4 percent lower than the national average.

The composition of a place’s household population influences its income structure. Retired households, for one, often have lower incomes than do those headed by working-age individuals, just as households with two working adults may have more income than households with one working adult. Nevertheless, an analysis of income data for family households, a subset of the larger household universe that tends to have higher incomes, finds similar significant differences between the state and nation. In 2013, the median North Carolina family earned $56,111 or 12.4 percent less than the typical family household in the United States.

In 2007, the year in which the United States fell into recession, the typical North Carolina household had an inflation-adjusted income of $50,186, as measured by the ACS. This was significantly lower than the national figure of $57,005.[27] The recession drove down that value nationally and locally. As Figure 3.1 shows, North Carolina’s median household income fell by 5.5 percent, or $2,755, from 2007 to 2009; the national value, in comparison, fell by 4.3 percent or $2,463.

A decline in median household income during the contraction phase of a business cycle is not unusual, and historically, income has tended to recover during the subsequent expansion. Unfortunately, no rebound has happened in the state or nation. Between 2009 and 2013, real median household income in North Carolina continued to fall significantly, dropping to $45,906 from $47,431, while the national value went to $52,250 from $54,452. The typical household in both the state and nation consequently ended 2013 with inflation-adjusted incomes significantly lower than they had when the recession began in 2007. In 2013, the typical North Carolina household received 12.4 percent less in income than did the typical American household and 8.5 percent less than it did 6 years earlier. In other words, the typical North Carolina household lost $4,280 between 2007 and 2013, an amount equal to almost 75 percent of what a middle-income household spent on food in 2013.[28]

As will be discussed in section 3.5, the decline of household income during the recovery is intertwined with the poor performance of the labor market. Nevertheless, the observed trends in median household income highlight the need to judge the economy’s ability to raise household living standards in relation to more than a few labor market indicators.

While a full analysis of the demographic impacts associated with the drop in real median household income is beyond this study’s scope, it should be noted that the declines have been widespread. As shown in Figure 3.2, real median household income levels were significantly lower in 2013 than in 2007 for North Carolina’s non-Hispanic White, African-American, Hispanic, and Native American households; only Asian households experienced no changes.

The ongoing recovery also has failed to deliver rising incomes for most income groups in North Carolina. Between 2009 and 2013, real average household income fell significantly or remained unchanged for every income group except for the top 5 percent of households. In 2013, the average household in the top 5 percent of the state’s income distribution received significantly more income than in 2009, an inflation-adjusted amount of $294,366 versus $281,552. That was an increase of 4.6 percent or $12,844 (Figure 3.3). In contrast, the real average income of households in the middle quintile fell significantly during the recovery, dropping to $45,940 from $47,759, for a decline of 3.8 percent or $1,819. The average income of households in the bottom fifth the income distribution, meanwhile, dropped by 4.5 percent during the recovery, falling significantly to $10,544 from $11,046.

Apart from the top 5 percent of households, every income group in North Carolina saw its average income fall from 2007 to 2013. Average income fell significantly for every income group during the contraction phase of the business cycle, and during the recovery, only the top 5 percent of households managed to return to an average income level that was statistically indistinguishable from the pre-recessionary value. And for the four quintiles in the bottom 80 percent of the income distribution, average income actually declined during the recovery.

As in most southern states, median income in North Carolina long has lagged behind the corresponding national value. A review of ASEC data shows that the typical North Carolina household had an inflation-adjusted income that was 8.2 percent, or $3,942, lower than that of the comparable American household in 1984.[29] That year, half of all households in North Carolina had more than $43,924 in income, while half of all households in the United States had an income in excess of $47,866. Put differently, the typical North Carolina household received $92 in income for every $100 received by the typical American household.

The gap separating the median household income in North Carolina from the national figure has fluctuated due to such factors as the business cycle, but the overall trend during the 1980s and 1990s was one of convergence, a trend that culminated circa 1996.

Figure 3.4 illustrates the pattern by averaging real median income data for two-year periods to smooth over the effects of shocks or anomalies. From 1984-85 to 1996-97, real median household income climbed to 98.6 percent of the national figure; in real terms, the typical North Carolina household in the late-1990s had an income that was 18.5 percent, or $8,143, higher than in the early 1980s. Unfortunately, the moment of parity was fleeting. Median household income levels in North Carolina held constant in the late 1990s, while the national figure rose due to the era’s economic boom. The 2001 recession then exacted a heavy toll from North Carolina, which experienced a 4.5 percent drop in median household income from 2000-01 to 2001-02. The weak recovery prevented North Carolina households from regaining much economic ground before the onset of an even worse recession.

By 2012-13, the median North Carolina household had an inflation-adjusted income of $41,683, an amount that was statistically no different from the $44,106 figure recorded in 1984-85. That meant that the typical North Carolina household had an income that was effectively no different than had been the case almost 30 years earlier.

Recent income losses have erased all of the progress North Carolina had made in bringing median household income to the national level. By 2012-2013, the typical North Carolina household received $80 in income for every $100 received by the typical American household—a gap wider than that recorded at any time since 1984-85.

3.4. An Increasingly Unequal State: A Changing Income Distribution, 2007-13 [back to top]

The declines in household income experienced in North Carolina in recent years have altered the distribution of income within the state and have yielded greater income inequality. Between 2007 and 2013, the distribution of income in North Carolina grew significantly more unequal relative both to the state’s recent history and to the United States as a whole.

One way to describe the extent of inequality within an income distribution is through a concentration ratio, which is a simple comparison of “the share of total income possessed by one group—typically the richest—to that of another group—typically the poorest.”[30] As a part of that analysis, Table 3.2 presents the share of household money income received in 2013 by each income quintile in North Carolina. If the $240.9 billion in annual income had been distributed equally among each quintile, each group would have received $48.2 billion; if the income had been distributed equally within each quintile, each household would have received $64,105.[31]

Yet as the table shows, the actual distribution of income was not so equal. In 2013, the top fifth of North Carolina households received 51.2 percent of total income. The remaining four-fifths of households shared 48.8 percent of total income, with just 3.3 percent of the overall amount flowing to the lowest-income households. Households in the middle of the distribution fared better, but even they received only $14 of every $100 in total household income.

Another way of describing the patterns is to compare the magnitude of differences among different groups. In 2013, the top quintile of North Carolina households received 15.5 times as much income as did the bottom quintile and 3.6 times as much income as did the middle fifth of households. Households in the middle of the income distribution received 4.3 times as much income as did the bottom quintile. Meanwhile, the top 5 percent of households received 7 times as much income as did the bottom 20 percent of households, and almost twice as much in income as the middle 20 percent of households received.

In one light, the concentration of income in North Carolina seemed to hold steady during the recession. In 2007, the top fifth of households received 4.4 times as much income as did the middle fifth, as opposed to 4.3 times as much in 2013. As shown in Table 3.3, key concentration ratios appear to have held relatively steady between 2007 and 20013, apart from some shifts from the bottom quintile to the top quintile and to the top 5 percent in particular. (Remember that money income tends to understate the incomes of the households with the highest and lowest incomes, so these data are apt to distort shifts involving the middle of the income distribution.)

Where the increase in income inequality becomes clear is when it is gauged with the Gini coefficient, “a statistical technique for measuring the inequality present in a distribution.”[32] The Census Bureau computes Gini coefficients as part of the ACS, with the values ranging from zero to one. A score of zero reflects a perfectly equal distribution of income, and a score of one reflects a perfectly unequal distribution—a distribution in which one unit has all of the income.

In 2013, North Carolina’s Gini coefficient of 0.481 was significantly higher than the national value of 0.477, meaning that the state’s income distribution was more unequal. And the state’s Gini coefficient was significantly higher in 2013 than it was in both 2007 and 2009 (Table 3.3). The distribution of income grew more unequal during the Great Recession’s contraction and recovery phases. When combined with other trends noted in this study, it appears that household income in North Carolina is declining and becoming more unequally distributed.

In 2013, households in North Carolina derived nearly $80 of every $100 in income from wage, salary, and self-employment payments.[33] Because labor income accounts for the bulk of the income received by most households, the decline of median household income in the wake of the Great Recession is intertwined with the relatively poor performance of the state’s labor market.

From December 2007, which is when the national economy slipped into recession, and February 2010, the month of maximum job loss in North Carolina, business establishments eliminated 326,600 more payroll jobs than they added; this translated into a 7.8 percent contraction in the state’s payroll base.[34] Payroll growth resumed in February 2010, but the growth has been modest, and it took until late 2014 for the state to have as many payroll jobs as it did at the end of 2007. These losses were spread across most every major industrial sector, and in February 2010, every major industrial sector except for the education and health services sector and the government sector had fewer payroll positions than had been the case in 2007. Particularly hard hit were the construction and manufacturing sectors, which experienced payroll contractions of 29.9 percent and 19.3 percent, respectively. The recovery, meanwhile, has been characterized by growth in comparatively low-wage sectors.

Job losses drove up unemployment across North Carolina. When unemployment peaked in North Carolina in early 2010, slightly more than 11 of every 100 participants in the state’s labor force were unemployed, up from 5 of every 100 in late 2007.[35] More than 522,000 Tar Heels were jobless and seeking work in early 2010, and while that number has fallen, it remains elevated relative to the pre-recessionary level. By any number of measures, the state’s labor market has failed to generate enough jobs to accommodate the 11.3 percent increase in the size of the working-age population that has occurred since 2007; the result is the existence of a sizable “jobs gap.”[36] Moreover, the statistical count of unemployment omits many people who are effectively jobless; a broader measure compiled by the U.S. Bureau of Labor Statistics found an average of 12.4 percent of Tar Heel workers to be underemployed in 2014.[37]

Poor labor market conditions have placed downward pressures on labor earnings and, by extension, household income. Most obviously, households coping with unemployment experience economic hardships, as do those with working-age members who need work but have stopped looking due to discouragement or who wish to work more hours than they currently are. Changes in the industrial and occupational structures of the economy further have resulted in many workers who were displaced from relatively high-wage fields like manufacturing finding re-employment in comparatively low-wage fields like accommodation and food services. A large pool of jobless workers also places downward pressure on the wages and incomes of employed workers, for when unemployment is high, firms freeze wages or use practices that effectively reduce the wages of employed persons, who often are unable to find better jobs due to depressed demand.

The downward pressure on labor earnings from the Great Recession is reflected in ACS data for persons ages 16 and older with earnings. As shown in Figure 3.5, real median earnings in North Carolina fell significantly from 2007 to 2013, dropping to $27,389 from $29,566.[38] Inflation-adjusted earnings fell by 4.2 percent, or $1,238, during the contraction phase of the Great Recession and then declined by another 3.3 percent, or $939, during the recovery phase of the business cycle. While the state’s overall pattern of decline resembles the national one, the statewide contraction has been more severe due to the weak growth in the recovery phase of the business cycle. From 2009 to 2013, labor earnings fell by 3.3 percent in North Carolina, versus a 1.1 percent national decline.

Unemployment and declining labor earnings often are attributed to the characteristics of individual workers, most typically their level of educational attainment, rather than to cyclical, macroeconomic, or institutional factors. A common explanation holds that the American labor market has changed due to the increasing diffusion of technologies that require workers with higher levels of education and skills. Individuals who lack the requisite skills and education, therefore, are more apt to be jobless or to hold lower paying jobs than their better skilled peers. Yet a review of earnings data disaggregated by the educational attainment of individual workers (ages 25+) casts doubt on the claim of “skill-biased” technological change, at least since 2007.

Between 2007 and 2013, median annual earnings fell significantly for every educational class in North Carolina and the United States. In North Carolina, as seen in Figure 3.6, workers with less formal education experienced the greatest relative drops in income, but every group saw its earnings decline. For instance, the real median earnings of workers with a high school diploma fell by 11 percent, or $3,133, between 2007 and 2013, and workers with a bachelor’s degree experienced a decline of 6.8 percent or $3,245. Even individuals with postgraduate degrees saw a 5.8 percent drop, with the entire decline occurring during the recovery phase of the business cycle.

Earnings have not increased significantly for any educational group during the recovery. Between 2009 and 2013, workers without a high school diploma and workers with a bachelor’s degree experienced no changes in their earnings, but the earnings of every other group of workers fell. Although education is a good thing, recent events suggest that education in isolation from larger structural or institutional concerns is not enough to ensure a stable, secure, and prosperous standard of living.

Since peaking in early 2010, North Carolina’s unemployment rate has fallen sharply, a development that has led many civic leaders and pundits to herald a “Carolina Comeback.” That claim, while alliterative, glosses over the deep problems that still trouble the state’s labor market and ignores the erosion in household income levels and living standards that have occurred since the last recession. Judged against the criteria of broadly rising incomes and living standards, North Carolina’s comeback is far short of the mark.

The income of the typical North Carolina household was lower in 2013 than it was in 2007, after adjusting for inflation. And the decline in income has touched most every kind of household all along the income distribution: family and non-family households, non-Hispanic White households and Hispanic ones, households headed by African Americans and those headed by Native Americans, well-educated households and those with less formal education—all of these have seen their earnings, incomes, and living income standards erode. Moreover, the recent decline in median household income has reversed all of the progress North Carolina once had made in bridging the gap between statewide and national income levels. The cumulative effect of these developments is simple but disturbing: the creation of a poorer, more unequal North Carolina that is failing to improve the living standards of its residents.

The author of this report is John Quinterno, a principal with South by North Strategies, Ltd., a research firm in Chapel Hill that specializes in economic and social policy. Over the course of his career, Quinterno has written extensively about labor economics, workforce development, regional policy, social insurance, and postsecondary education. He is the author of the book Running the Numbers: A Practical Guide to Regional Economic and Social Analysis (New York: Routledge, 2014), as well as a visiting lecturer at the Sanford School of Public Policy at Duke University. A graduate of the University of Notre Dame and the University of North Carolina at Chapel Hill, Quinterno resides in Chapel Hill.

[1] All of the data in this paragraph come from author’s analysis of N.C Department of Commerce, Labor and Economic Analysis Division, Current Employment Statistics (seasonally adjusted series), various months; and Local Area Unemployment Statistics (seasonally adjusted series), various months.

[2] Author’s analysis of U.S. Bureau of Labor Analysis, Local Area Unemployment Statistics (seasonally adjusted series), various months.

[3] Author’s analysis of U.S. Census Bureau, American Community Survey, One-Year Estimates, 2013.

[4] Author’s analysis of Economic Policy Institute extract of U.S. Census Bureau, Current Population Survey, various years. Inflation adjustment made with the CPI-U-RS.

[5] Author’s analysis of U.S. Census Bureau, American Community Survey, One-Year Estimates, various years.

[6] Author’s analysis of U.S. Census Bureau, Annual Social and Economic Supplement, Current Population Survey, various years.

[7] All of the statements in this section come from author’s analysis of U.S. Census Bureau, American Community Survey, One-Year Estimates, various years. All stated differences in this section have been tested for statistical significance at a 90 percent confidence level and found to be significant.

[8] All of the statements in this section come from author’s analysis of U.S. Census Bureau, Annual Social and Economic Supplement, Current Population Survey, various years.

[9] Author’s analysis of U.S. Census Bureau, Annual Social and Economic Supplement, Current Population Survey, various years.

[10] The author of the report was John Quinterno, a principal with South by North Strategies, Ltd. Erica Taylor provided editorial assistance. Thanks to Justin Guillory, Mac McCorkle, and Marion Johnson of Think North Carolina First for their constructive feedback and their assistance in disseminating the report.

[11] John Quinterno, Running the Numbers: A Practical Guide to Regional Economic and Social Analysis (New York: Routledge, 2014), 194.

[16] “Other income” includes unemployment insurance compensation, worker’s compensation, alimony, child support, certain Department of Veterans Affairs payments, military allotments, family allotments, and other kinds of periodic income other than earnings.

[18] The National Bureau of Economic Research, a nonprofit organization regarded as an authoritative source on the business cycle, sets the dates of various phases by month, but income data are gathered on an annual basis. This report consequently considers any year with recessionary months in it to be a recessionary year.

[20] To determine the statistical significance of differences between two ACS estimates at a 90 percent level of confidence, use these steps: a) determine the standard errors associated with each estimate by dividing the margin of error associated with each estimate by 1.645; b) square the value of each standard error; c) sum the squared values; d) compute the square root of the sum of the squared values; e) find the difference between the two estimates of interest; f) divide the difference by the value obtained in step d; and g) take the absolute value of the resulting quotient and compare it to 1.645. Values at or above that level are statistically different at a 90 percent level of confidence level.

[21] For more information about this measure of the price level, see U.S. Bureau of Labor Statistics, “CPI Research Series Using Current Methods,” last revised March 27, 2014, http://www.bls.gov/cpi/cpiurs.htm.

[22] All information in this paragraph comes from author’s analysis of U.S. Census Bureau, American Community Survey, One-Year Estimates, various years.

[23] All information in this paragraph comes from author’s analysis of U.S. Census Bureau, Annual Social and Economic Supplement, Current Population Survey, various years.

[24] Unless noted, all information in this paragraph comes from author’s analysis of U.S. Census Bureau, American Community Survey, One-Year Estimates, various years.

[25] Unless noted, all information in this paragraph comes from author’s analysis of U.S. Census Bureau, American Community Survey, One-Year Estimates, various years.

[26] Unless noted, all information in this section comes from author’s analysis of U.S. Census Bureau, American Community Survey, One-Year Estimates, various years.

[27] Unless noted, all information in this section comes from author’s analysis of U.S. Census Bureau, American Community Survey, One-Year Estimates, various years.

[33] Author’s analysis of U.S. Census Bureau, American Community Survey, One-Year Estimates, 2013.

[34] Unless noted, all information in this paragraph comes from author’s analysis of N.C. Department of Commerce, Labor and Economic Analysis Division, Current Employment Statistics (seasonally adjusted series), various years.

[36] Depending on the assumptions used, North Carolina had anywhere from 169,000 to 390,000 fewer payroll jobs than it should have had, if job growth had kept pace with the growth in the working-age population, based on a December 2014 analysis of labor market data conducted by South by North Strategies, Ltd.